2025 (10) TMI 1285 - SCH - Customs

Goods seized under Customs Act Section 110(1) must be returned if Section 110(2) deadline lapses unextended

SC held that where goods are seized under Section 110(1) of the Customs Act and no notice under Section 124(a) is issued within six months, the ... Seizure of Goods - Effect of non-issuance of SCN u/s 124 of the Customs Act, 1962 within the stipulated period as prescribed under Section 110(2) of the Act, 1962 - provisional release of seized goods - HELD THAT:- In the case in hand, indisputably the car was seized under sub-section (1) and furthermore no notice in respect of the goods seized was given under clause (a) of section 124 of the said Act within six months of the seizure. The consequence, therefore, in such a case is that the goods shall be returned to the person from whose possession they were seized. The first proviso to sub-section (2) of section 110 of the said Act, however, provides that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend the six months' period by a period not exceeding six months and inform the person from whom such goods were seized before the expiry of the period so specified. The proviso therefore contemplates that the period of six months mentioned in sub-section (2) of section 110 of the said Act can be extended by the higher authority for a further period not exceeding six months, for reasons to be recorded in writing. The appeals are all anterior in time to the coming into force of the second proviso to Section 110(2) of the Act, 1962. Although, it is not necessary to say anything further, yet it is clarified that the time period to issue notice under Clause (a) of Section 124 is prescribed only in sub-section (2) of Section 110 of the Act, 1962. This time period has nothing to do ultimately with the issuance of show-cause notice under Section 124 of the Act, 1962. The two provisions are distinct and they operate in a different field. All the eleven appeals preferred by the Revenue stand dismissed and the two appeals filed by the assessees against the Bombay High Court judgment stand allowed. Issues: Whether provisional release of seized goods under Section 110-A of the Customs Act, 1962 operates to exclude or suspend the mandatory operation of the time-limit and its consequence prescribed in Section 110(2) (and its proviso) such that failure to issue a show-cause notice within the statutory period does not entitle the person from whose possession the goods were seized to unconditional release.Analysis: The Court examined the text and scheme of Section 110(2), its proviso permitting a one-time extension by the Principal Commissioner/Commissioner for reasons recorded in writing, the separate power in Section 110-A to provisionally release seized goods on bond, and Section 124 requiring issuance of show-cause notice before confiscation. The Court considered pre-existing decisions and administrative instructions, and noted the subsequent legislative amendment (Finance Bill, 2018) that inserted a second proviso excluding the six-month limit where provisional release has been ordered, observing that the appeals before it are anterior to that amendment. The Court held that Section 110(2) prescribes a mandatory outer time-limit whose statutory consequence on non-issuance of noticereturn of the goods to the person from whose possession they were seizedcannot be nullified by an interim/provisional release under Section 110-A. The power under Section 110-A is interim in nature and does not contain language or a non-obstante provision to curtail the mandatory operation of Section 110(2) as it stood at the relevant time; the only statutory mechanism to extend the period is the first proviso to Section 110(2).Conclusion: The appeal is decided in favour of the respondent; provisional release under Section 110-A does not prevent the operation of Section 110(2) and failure to issue the show-cause notice within the statutory period entitles the person from whose possession the goods were seized to the return of the goods.